Amidst high inflation, a negative economic outlook, a plunging currency, a slow response to environmental disaster, a growing public health crisis, and new proposed limitations on freedom of expression, this week saw a number of negative stories coming out of Brazil.
On Tuesday, the International Monetary Fund (IMF) downgraded its outlook for the Brazilian economy, forecasting a contraction in GDP of 3.5% next year. This makes Brazil the worst performing among the evaluated economies. Brazil is currently experiencing its longest recession (CNN) since the 1930s.
This severe economic downturn has several causes (CNN), including depressed commodities prices (especially oil), a slowdown in the Chinese economy (the greatest consumer of Brazilian exports), and political instability related to the widespread corruption scandal at the state-run oil company Petrobras.
On Wednesday, the Brazilian Central Bank surprisingly chose not to raise interest rates (Financial Times), maintaining the benchmark Selic rate at 14.25%. An increase of 25 or 50 basis points had been expected to combat rising inflation, which reached 10.7% at the end of 2015, far exceeding the target rate of 4.5%. It is hoped that this less aggressive approach to controlling inflation will help the struggling Brazilian economy. In response to the unchanged interest rate, the value of the Brazilian Real dropped to four-month lows (Bloomberg) amidst worries about the Brazilian Central Bank’s independence.
Following the worst environmental disaster in Brazil’s history, the government and the responsible mining company, Samarco, are getting closer to reaching a settlement (CNBC). They are negotiating a settlement of $4.8 billion to cover clean-up efforts, which are expected to last a decade. The Brazilian environmental protection agency IBAMA has criticized the package proposed by Samarco, a joint venture between Vale and BHP Billiton, for not doing enough to remedy the damage. The disaster occurred after a dam burst and a tsunami of toxic mud from an iron mine destroyed several communities and spilled into rivers, eventually dumping toxic waste into the Atlantic Ocean.
After a wave of online criticism and satire, a new law has been proposed in the Brazilian Congress to limit freedom of expression on the Brazilian internet (Time). It would require all websites and apps to collect the personal information of users and follows a trend of increased limits on online freedom. In December, a judge shut down Whatsapp in Brazil for 48 hours, and in 2012, the head of Google in Brazil was arrested for not taking down a YouTube video that was critical of a politician. The proposed law is being championed by Eduardo Cunha, the speaker of the lower house of Congress, who is himself being investigated for corruption (The Guardian) and has initiated impeachment proceedings against President Dilma Rousseff (CNN).
Finally, figures released by the Brazilian Health Ministry indicate that the outbreak of the Zika virus continues to expand (Wall Street Journal). Although the disease is rarely fatal in adults, the infection of pregnant women has been connected to microcephaly in infants, a condition in which babies are born with undersized brains and skulls and could potentially suffer severe developmental problems. There have been almost 4,000 cases of Zika-related microcephaly since reporting became mandatory across Brazil last October. Brazil is also suffering a record outbreak of Dengue, which is transmitted by the same mosquito that carries the Zika virus.